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4 Answers
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It was purchased before 1993 by Weinstein & DePaolis, and subsequently sold to Paypal (or the company was bought out). In 1993 IANA reserved all remaining single letter second-level domains, and grandfathered the ones already issued. Other functional, corporate examples domains are t.co (Twitter) and q.com (Qwest).

On December 1, 1993, the Internet Assigned Numbers Authority (IANA) explicitly reserved the remaining single-letter and single-digit domain names. The few domains that were already assigned were grandfathered in and continued to exist.

+1 for not treating Wikipedia as an authority on anything.
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John GardeniersSep 5 '10 at 21:31

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@John wikipedia is pretty much an authority on EVERYTHING.
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Chris MarisicSep 5 '10 at 22:08

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@Izzy + John - Old-school thinking there folks. Wikipedia is a fine reference source so long as all parties understand how it works and the obvious due-diligence/caveaty that implies. The early 'wikipedia is not reliable' meme seemed to be perpetuated by people who were shocked - SHOCKED to discover that any old joe bloggs could edit it! Horror!
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Chris ThorpeSep 6 '10 at 8:16

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I find it ironic that searching for "Reliability of wikipedia" on Google returns with the first result as the "Reliability of Wikipedia" article on... Wikipedia. Redundant: see recursion.
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WesleySep 17 '10 at 7:37

I don't know how Paypal has x.com, but a.com, b.com and c.com seem to be registered to the Internet Assigned Numbers Authority (IANA), and has been since 1992. Most of the single-letter .com domains are like that except q.com (qwest; since 1999?), x.com (paypal, since 1993?), and z.com (nissan, since 1997?)

You have to check the whois database to see what's taken and by whom.

I think the 1 letter domains were taken up by IANA back in 1992 and they made 3 exceptions. And the 2 letter domains are simply all taken so it's simplest for your registrar to tell you to not even bother with a 2 letter domain.